Entitlements: What Difference Does it Make?

Last week they announced the results of the second year of the Oregon experiment, asking the important question: what difference does Medicaid make? The answer, as Megan McArdle reports, is not much, at least not in measurable health outcomes.

In this the Oregon experiment agrees with the experts. The RAND study done in the 1970s and reported in the 1980s found that giving people health insurance didn't make a difference to their health; it just increased their consumption of health care. And that aligns with the experts cited by James C. Riley in Rising Life Expectancy: A Global History. Health care (called bio-medicine) is just one of six factors ("public health, medicine, wealth and income, nutrition, behavior, and education") undergirding our healthy, wealthy way of life. You can check out the details at my "Experts Agree on Healthcare" here.

But that Oregon result set me to thinking not just about government healthcare but entitlements in general.

Isn't the whole point of entitlements that they don't really make much of a difference? I mean that if, e.g., Medicaid doesn't make a difference, it really doesn't matter, except the waste of money. Same with education. We know that the education system stinks, but America still seems to rub along.

We know that when you go the full metal jacket on government, where government runs everything as in the totalitarian Soviet Union or Maoist China, the result is mass starvation, and worse.

On the other hand, if the government does nothing, what's the point of climbing the greasy pole to political power?

The fundamental fact of political rule is that government is an armed minority occupying a territory, and it must sustain itself with requisitions from the people that live there. It can do this with terror, but it's usually easier and better for all concerned if government courts the support of the people by handing out free stuff to its supporters. See my "Government and the Technology of Power."

The only question is: How? How does the ruling class keep its power and pay off its supporters? Plan A, full socialism or communism, is a failure. But taxing and regulating the economy and diverting monies through the government to your supporters seems like a real winner, as long as you don't overdo it like Europe right now and the U.S. real soon.

Here's how it works:

People like pensions. So the government taxes the workers and then nobly hands out Social Security checks to a grateful multitude. What difference did it make? Not much, other than taking money from A to give it to B.

Women like healthcare. So the government taxes the rich and hands out healthcare to every woman that wants to beat breast cancer or needs to care for her mother. Without government, she knows, she could never afford it. But what difference did it make? Not much, except take money from A and give it to B and drown everything in a tidal wave of rules.

Parents want to give their kids a start in life. What better than to send them to government child custodial facilities five days a week for sixteen years so that they aren't a bother to mommy's career, and so that they don't compete in the job market for dad's job? What has the government done? Well it's taken money from A and given it to an army of teachers and administrators. Education is no more than a by-product of paying off the teachers.

Rich people want to help the poor. So why not "pay at the office" and let the government make war on poverty? It only costs about $0.6 trillion a year. But the government doesn't really do anything about poverty except take money from A and give it to B.

The key rule for a successful ruling class it this. Don't try to do anything or make anything. Just talk about taxing the rich and the corporations and hand out the free stuff.

But in real life the ruling class can't keep its mitts off. Rulers are fighters; they want to direct the fight against evil; Democratic rulers fight poverty and evil corporations. So Democrats can't resist the temptation to take over the schools and form the minds of children themselves. They decide that an elite corps of policy analysts and design and build a system to expand health insurance to the uninsured and "bend the cost curve" at the same time.

Then all of a sudden government actually does start to make a difference and things fall apart.

Because the only thing that political rulers can really do well without screwing up is handing out free stuff to their supporters.

That's all political leaders have known how to do since the dawn of time.

Last week they announced the results of the second year of the Oregon experiment, asking the important question: what difference does Medicaid make? The answer, as Megan McArdle reports, is not much, at least not in measurable health outcomes.

In this the Oregon experiment agrees with the experts. The RAND study done in the 1970s and reported in the 1980s found that giving people health insurance didn't make a difference to their health; it just increased their consumption of health care. And that aligns with the experts cited by James C. Riley in Rising Life Expectancy: A Global History. Health care (called bio-medicine) is just one of six factors ("public health, medicine, wealth and income, nutrition, behavior, and education") undergirding our healthy, wealthy way of life. You can check out the details at my "Experts Agree on Healthcare" here.

But that Oregon result set me to thinking not just about government healthcare but entitlements in general.

Isn't the whole point of entitlements that they don't really make much of a difference? I mean that if, e.g., Medicaid doesn't make a difference, it really doesn't matter, except the waste of money. Same with education. We know that the education system stinks, but America still seems to rub along.

We know that when you go the full metal jacket on government, where government runs everything as in the totalitarian Soviet Union or Maoist China, the result is mass starvation, and worse.

On the other hand, if the government does nothing, what's the point of climbing the greasy pole to political power?

The fundamental fact of political rule is that government is an armed minority occupying a territory, and it must sustain itself with requisitions from the people that live there. It can do this with terror, but it's usually easier and better for all concerned if government courts the support of the people by handing out free stuff to its supporters. See my "Government and the Technology of Power."

The only question is: How? How does the ruling class keep its power and pay off its supporters? Plan A, full socialism or communism, is a failure. But taxing and regulating the economy and diverting monies through the government to your supporters seems like a real winner, as long as you don't overdo it like Europe right now and the U.S. real soon.

Here's how it works:

People like pensions. So the government taxes the workers and then nobly hands out Social Security checks to a grateful multitude. What difference did it make? Not much, other than taking money from A to give it to B.

Women like healthcare. So the government taxes the rich and hands out healthcare to every woman that wants to beat breast cancer or needs to care for her mother. Without government, she knows, she could never afford it. But what difference did it make? Not much, except take money from A and give it to B and drown everything in a tidal wave of rules.

Parents want to give their kids a start in life. What better than to send them to government child custodial facilities five days a week for sixteen years so that they aren't a bother to mommy's career, and so that they don't compete in the job market for dad's job? What has the government done? Well it's taken money from A and given it to an army of teachers and administrators. Education is no more than a by-product of paying off the teachers.

Rich people want to help the poor. So why not "pay at the office" and let the government make war on poverty? It only costs about $0.6 trillion a year. But the government doesn't really do anything about poverty except take money from A and give it to B.

The key rule for a successful ruling class it this. Don't try to do anything or make anything. Just talk about taxing the rich and the corporations and hand out the free stuff.

But in real life the ruling class can't keep its mitts off. Rulers are fighters; they want to direct the fight against evil; Democratic rulers fight poverty and evil corporations. So Democrats can't resist the temptation to take over the schools and form the minds of children themselves. They decide that an elite corps of policy analysts and design and build a system to expand health insurance to the uninsured and "bend the cost curve" at the same time.

Then all of a sudden government actually does start to make a difference and things fall apart.

Because the only thing that political rulers can really do well without screwing up is handing out free stuff to their supporters.

That's all political leaders have known how to do since the dawn of time.